Bangladesh’s macroeconomy faces mounting risks from rising geopolitical tensions in the Middle East and global economic instability driven by the ongoing war. To counter this, the country’s top industrialists advise moving beyond conventional measures and taking proactive, multi-pronged initiatives. Planned austerity and radical reform in strategic sectors such as energy and food security, they argue, now outweigh the threat of a sudden crisis.
Bonik Barta spoke with several industrialists to determine what policymakers should do. Their discussions yielded eight key recommendations. Energy security and the search for alternative fuels top the list. The industrialists also stress controlling inflation to tolerable levels, ensuring food security and raising domestic resource mobilisation. They urge stronger sectoral monitoring to lift VAT collection, alongside integrated steps to improve the social safety net’s effectiveness. They further cite the need for ethical standards and necessary reforms in the financial sector, diversified sourcing and a more effective role for overseas commercial offices.
An early-warning system and greater public engagement, the industrialists add, can also play a crucial part. On energy security they emphasise using alternative sources and leveraging local capacity. Some suggest a quick step: produce ethanol instead of spirit and blend it with conventional fuel. Others propose securing gas supplies from Bhola as CNG or micro-LNG to keep fertiliser production running. They also recommend using LPG as synthetic natural gas in fertiliser plants to sustain agricultural output.
Azam J Chowdhury, chairman of the East Coast Group, told Bonik Barta: “Bangladesh must focus hardest on energy procurement in preparing for the Middle East crisis. Energy supply management touches every sector of the economy. The government is trying to secure energy from alternative sources which is a good initiative. But it must expand sources. This may raise payments. But keeping the economy stable demands it. The world ships 20 percent of its energy through the Hormuz Strait. Bangladesh relies on the Middle East for 90 percent of its fuel. If we secure energy supplies in advance, the remaining steps to stabilise the economy become easier.”
Alongside energy security, the country’s top industrialists stress controlling inflation and strengthening food reserves. For a tolerable inflation strategy, they call for analysing market conditions. Better to introduce a “managed inflation economy” by raising fuel and edible oil prices in a planned way, they argue, than to face unmanageable inflation. This would avert sudden catastrophe. They say officials must prepare the public to accept price pressures to handle the situation.
Mostafa Kamal, chairman and managing director of Meghna Group of Industries, told Bonik Barta that planning with foresight is now critical. “Our core issue is energy,” he said. “We must secure it. LPG prices have risen roughly $400 per tonne. We need to think how to control such inflation. Securing LNG, LPG and crude oil supplies has become extremely important given the Middle East crisis.”
He urges taking expert advice when curbing inflation, weighing the impact on the macroeconomy. Total avoidance of inflation is impossible, he says, but a balanced policy can reduce its harm. Kamal warns: “If fixed-income people see no rise in earnings while inflation keeps climbing, consumption will fall, health costs will rise and living standards will suffer overall.”
On food security, Mostafa Kamal said: “Developed and even some developing countries maintain preparedness infrastructure for crises. When fuel runs short during a disaster, their government releases stocks to the market. When food runs short, it does the same. It keeps the market under control. But Bangladesh holds at most 15 days of fuel oil reserves. Developed countries hold six months to a year. We need far-sightedness across the board, including infrastructure development, to take such steps.”
Industrialists also suggest converting part of the foreign exchange reserve into food stockpiles. Fearing a global food crisis, they say the government could use some of the reserves to import food urgently. Drawing on experience of importing 3 million to 6 million tonnes of rice a year, they argue for raising official stocks to 7 million–8 million tonnes, creating a “food stockpile” that would serve as a buffer in a crisis.
A shortage of foreign currency could block food imports, they add. So Bangladesh must increase reliance on agriculture and secure fertiliser and fuel support. Maintaining energy supplies to local and export industries is also vital. Damage to any of these three sectors — food security, local industry or export industry — could bring major disaster, they warn. Disruption to garment manufacturing, in particular, risks hurting the country’s image in international markets.
Mohammed Amirul Haq, managing director of Delta Agro Food Industries of the Seacom Group and president of the Bangladesh Cement Manufacturers Association, told Bonik Barta: “We’re at a critical moment. We don’t know what tomorrow holds. We must decide quickly what we need to do in the short term, then phase in medium and long-term plans.”
Haq stressed the need for commercial coordination on pricing. “We must be cautious about subsidies,” he said. “How long will the government pay them? The longer it does, the more paralysed the economy becomes. We need effective steps to raise domestic revenue, widen the tax net. The government is trying its best. The private sector must also strongly encourage it to handle the situation.”
Industrialists also call for sectoral monitoring of VAT collection to lift domestic resource mobilisation. They propose a radical overhaul of the VAT administration. Eighty percent of all business, they note, is controlled by 20 percent of large companies. Identifying 50 key sectors, such as steel, ceramics, cement, plastics and aluminium, and applying “continuous reconciliation” or intensive oversight to those big companies would multiply revenue. This would reduce harassment of ordinary traders and restore fiscal discipline.
Anwar Ul Alam Chowdhury Parvez, president of the Bangladesh Chamber of Industries (BCI), warns of a prolonged crisis ahead and urges an integrated response. “First we must acknowledge the big challenge before us,” he told Bonik Barta. “This isn’t a short-term crisis. Global geopolitics threatens to prolong it. Distrust among Europe, America and other economic zones has made matters worse. The government must take integrated action, coordinating businesspeople, economists and the relevant sectors.”
The business leader notes that banking and energy crises have slowed economic growth in recent years. “Unemployment has risen,” he says, “and global inflation is affecting the country. Higher energy costs are pressuring the whole economy. Exports are taking a hit. If dollar supplies fall, imports of fuel oil and raw materials could break down.” In this situation, he calls for budgeting and policymaking based on current dollar inflows.
Industrialists urged better coordination of the social safety net. The country currently runs 42 to 43 separate programmes. Bringing these under an integrated framework and making delivery more efficient, they suggest, would help. An agricultural card or digital database could classify the 20 percent ultra-poor by gender and demography. Direct assistance through such means, they argue, would ease social protection.
On financial sector ethics and reform, entrepreneurs say the culture of loan rescheduling or blanket waivers for businessmen must end. They urge an investment-friendly environment. Closing tax evasion and exemptions to create a “fair monetary system”, they add, could inject dynamism into the economy.
Kamran Tanvirur Rahman, president of the Metropolitan Chamber of Commerce and Industry (MCCI), thinks special funds or additional financing may be needed to keep industries running. High interest rates, he notes, could become a major obstacle in the current situation. Emphasising proactive steps given the global energy crisis, he told Bonik Barta: “Before any action, the government must clearly state what decisions it’s taking. Then implement them decisively. Energy prices have already risen globally and the impact will reach the domestic market. A high-level meeting is expected soon. But determining the scale and method of price adjustment is crucial.”
He warns that raising energy prices will increase production costs for many factories, potentially making survival difficult. He suggests considering cuts in taxes and duties on the energy sector. Many countries, he points out, are already trying to manage the situation by lowering oil taxes.
Turning to export industries, he said uncertainty hangs over whether higher production costs can be passed on to international markets. Global demand could also fall, which would pressure the country’s export sector. Various challenges have emerged in the domestic economy alongside those abroad. The government may take different steps, he notes, but maintaining regular engagement with the business community is crucial to implementing them effectively.
Industrialists advise diversifying international procurement of energy and food rather than relying on a single source. They called for the foreign ministry and Bangladesh’s missions abroad to be more active in securing supply diversity. They recommend setting specific targets for these missions to find new sources.
Entrepreneurs also stress early warning and public engagement. Officials must inform people beforehand about the reality and deliver clear messages. They call for involving ordinary citizens in accepting austerity. If implemented quickly, such multi-pronged initiatives, they believe, could shield the economy from the Middle East crisis.
Mahmud Hasan Khan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told Bonik Barta: “What we expect from the government is energy security. The Middle East war has increased energy uncertainty. To secure supplies, the government must diversify import sources and do so permanently. Initially, we need diversity to reduce risk. As long as import dependence remains, we must emphasise this.”
He expects a long-term rise in local energy capacity. “We need a quick decision on how to bring Bhola gas into the mainstream,” Khan said. “The cancelled renewable energy contracts, especially for solar power, should be renegotiated if possible. This has sent a misleading signal to foreign and domestic investors that any agreement with the government may lack security or durability. We also expect our proposals on renewable energy in the budget to be adopted.”